PLAID CALL FOR FULL SEPARATION OF BANKING INTERESTS

WARNING THAT CITY LOBBYISTS WILL TRY TO DELAY OR WEAKEN BANK CHANGES

Plaid Cymru’s Treasury spokesperson, Jonathan Edwards MP, has today called for full separation of banks’ retail and investment arms so that they are not part of the same organisation.

The final report by the Independent Commission for Banking (the Vickers Report) supported the separation of banks’ retail and investment arms within one structure with the sections ring-fenced, but Mr Edwards believes that this separation should go further to create institutions independent of each other.

If enacted, this will ensure safety of customers’ deposits in high street retail banks as they will not be threatened by losses from investment banks – as happened in the financial crisis and led to the bailing out of the banks.

However, Mr Edwards warned that, whatever is announced now, powerful financial lobbyists will continue to try and force the government’s hand to delay or weaken the Independent Commission on Banking’s recommendations.

Mr Edwards said:

“It has long been Plaid Cymru policy to separate the retail and investment sections of banks. In fact, we think they should go further and not even be in the same organisation.

“The problem with the system supported for decades by Labour and the Conservatives is that when the banks made a profit, the bankers made money – but when the banks made a loss, it was the taxpayer who bailed them out.

“In effect, there wasn’t what we call ‘moral hazard’ – no matter how big the deal or bad the judgement, the banks couldn’t lose.

“We need to ensure that the safety of people’s money and every day services, such as the ability to borrow for mortgages or take money from cash machines, are not affected by risky financial operations and casino capitalism.

“My concern though, is that powerful financial lobbyists will get to the Tories and Labour and try to water down these recommendations or delay them being brought into force.

“Introducing them seven or eight years down the line in 2019 may be too late to stop this happening again.

“All members of the House of Commons with interests in the financial sector should declare them on the floor when they speak on these issues so that there is transparency.”

ENDS / DIWEDD

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